Businessweek Archives

Behind Surging U.S. Illegitimacy

October 13, 1996

Economic Trends

BEHIND SURGING U.S. ILLEGITIMACY

The demise of shotgun marriages

The statistics are stark. Since the mid-1960s, the share of white children born out of wedlock has soared sixfold, to nearly 20%, and the black illegitimacy rate has tripled, to 66%. These trends are a major contributor to the high rate of poverty and related social ills that plague the nation.

Can they be reversed? Some social critics argue that coming welfare cuts will deter poor single women from having babies. But a new study by George A. Akerlof of the University of California at Berkeley and Janet Yellen, currently a member of the Federal Reserve's board of governors, suggests that such cuts are likely to have little impact on illegitimacy and could well make things worse.

The two economists reject current theories that attribute the rise in out-of-wedlock births to overly generous welfare benefits and the poor job prospects of less educated young black men. They note, for example, that illegitimacy rose most sharply in the 1970s and 1980s, just as real welfare benefits were falling. And marriage rates among better educated young black men have also declined substantially.

Rather, Akerlof and Yellen argue that a technology shock--the availability of the pill and the legalization of abortion in the late 1960s and early 1970s--weakened the bargaining leverage of unmarried young women in their sexual relations. Before these changes, young women engaging in premarital sex were able to extract promises of marriage from their partners in the event that a pregnancy ensued. Now, however, both women and men could engage in sex without fear that a child might result.

The upshot was a fall in fertility--and paradoxically a rise in out-of-wedlock births. Here's why: The sexual freedom embraced by many single women left others who were opposed to contraceptives and abortions (or were ignorant of their use) with no bargaining power in their relations with young men. And once pregnant, they could hardly use a condition that could be terminated as an argument for marriage.

In other words, write Akerlof and Yellen, the implicit male-female contract over sex was changed in a way that spurred illegitimacy. Specifically, the incidence of shotgun marriages declined sharply. Whereas 52% of babies conceived out of wedlock were born to married couples in the early 1960s, the share fell to just 27% in the early 1990s.

Thus, given changing sexual and social norms, the authors doubt that cutting welfare benefits will reduce illegitimacy very much. A better strategy, they say, would be to provide single women with easier access to birth-control information and devices. And to force fathers to support their out-of-wedlock offspring. That would at least give men a strong economic incentive to avoid fathering such children.BY GENE KORETZReturn to top

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DO WAGES PUSH UP PRICES?

Studies say it's the other way 'round

It's just possible that the Federal Reserve's recent decision to forgo an interest-rate hike was influenced by two articles published by regional Fed banks early this year. The articles focused on the relationship between wages and subsequent inflation--the very issue that reportedly inspired a number of the Fed's regional bank presidents to press for monetary tightening.

The first article, published by the San Francisco Fed, reported that price changes appear to predict future wages, "while wage changes do not have much effect on prices." The second, by the Dallas Fed, found that inflation tends to precede wage growth, not vice versa.

Ironically, the authors of both studies used their findings to argue that recent slow wage growth didn't mean that inflation would stay low. (Since then, wages have picked up a bit.) But obviously the reverse also applies: Recent faster wage growth doesn't necessarily mean that inflation will accelerate.BY GENE KORETZReturn to top